Do you know what stage your home loan is in or if you have the most suitable option for your circumstances? It is important to regularly review your mortgage to ensure you are getting the best possible deal. You won’t know how much you could be saving if you never assess it.
Blogger: Gavin Smith, director & general manager, State Custodians
Whether you’ve had your mortgage for two years or twenty years, regular check-ups can be extremely valuable. But when are good times to review your home loan?
End of the fixed rate term
Once the fixed rate period on your home loan ends, the repayments are most likely going to change as the interest rates changes to the variable rate and may not be as competitive. Since you are no longer locked into the loan, you can shop around for other more competitive home loan products.
End of interest only term
Interest free periods are often restricted to a certain time period (such as 10 years). So, when it comes close to the interest only period ending and you want to extend the interest only period, speak with your lender about doing so. If they are not able to, you may need to refinance to another home loan or lender.
Too much debt
If you have a number of financial commitments, such as credit cards and other loans, and you are struggling to meet the monthly repayments, consider consolidating all of your debt into your mortgage. Not only will this cut down the number of repayments you have to remember, but you may also save interest as you will only be charged on the total amount.
Haven’t reviewed your home loan in several years
Many borrowers become complacent with their home loans and let money come out of their accounts for repayments without thinking about it. Not reviewing your home loan and comparing it with what else is on the market could mean you might be missing out on more suitable products that could save you more money. A feature such as an offset account is one example and it can allow extra funds to work for you by saving interest on your mortgage.
Also, as the mortgage market is extremely competitive, lenders are regularly releasing new and improved products and services to attract new borrowers. You may find that after a few years, there are better home loans available compared to your current loan. At the very least, you should consider checking and comparing your loan every 12 months.
About the Blogger
Gavin Smith is Director & General Manager of State Custodians and has over 20 years’ experience in leadership roles within the banking services sector. An expert in personal finance, securitised lending and the mortgage industry, Gavin has a Post Graduate Degree in Management from the Australian Graduate School of Management (UNSW), including several mortgage and securitisation qualifications.
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